Gary Jason: Casualties in Obama trade wars

President Barack Obama points to an audience member during a town hall meeting at Indian Hills Community College, Tuesday, April 27, 2010, in Ottumwa, Iowa. (AP Photo/Charlie Neibergall)

The Obama administration has grandly announced yet another initiative, called "the National Export Initiative," aimed at doubling American exports over the next five years. This is richly ironic, considering that this administration is by far and away the most protectionist, anti-free-trade administration since World War II. It is worth asking, who exactly is protected, and who pays the cost, when our government engages in protectionist policies.

Consider a couple of the trade wars in which we are now involved, caused by our protectionist laws. Last year the administration decided to cancel a pilot program giving Mexican truckers access to the U.S. market. At the behest of the Teamsters union, Obama killed the program. Mexico, tired of seeing the U.S. violate a deal agreed to under NAFTA nearly 20 years ago, retaliated by putting steep tariffs – up to 45 percent – on a host of U.S. goods, from paper to grapes. $2.4 billion in new tariffs, to be exact.

Who benefitted from this deal? Certainly, the chief beneficiaries were a relatively small number of unionized truckers, namely, those who felt afraid of competing with Mexican trucks (which were, by the way, subject to strict safety inspections). And, most of all, Mr. Obama himself, who received lavish support from the Teamsters and other unions bankrolled by megamillions in diverted union dues and countless hours of members' time.

But who is hurt? Who bears the cost? First, consumers have to pay. We all have to pay those tariffs as well as the increased transportation costs through higher prices.

But also hurt are other workers, the vast majority of whom are not in unions. (About 7 percent of U.S. workers in private industry are unionized). The Mexican trade war is costing jobs, from paper mill workers in Wisconsin to agricultural workers in Washington State. The U.S. Chamber of Commerce puts the cost of the Mexican tariffs at 25,000 American jobs.

Third, U.S. taxpayers take a hit. We have to pay the unemployment insurance, Medicaid, food stamps and other welfare costs of all those workers whose jobs are lost, who number far more than the few hundred truckers worried about competition from Mexico.

Next, consider Brazil. A small number of American cotton growers get lavish federal subsidies, and because of this, Brazilian cotton farmers are effectively frozen out of the American market. Outraged, Brazil filed a case against us with the World Trade Organization, which we lost. The WTO awarded Brazil the right to retaliate. The Brazilians warned us that they intend to start with over 100 products, which will be nailed with tariffs up to 100 percent. To stop those tariffs, the Obama administration is proposing to give Brazilian cotton growers $147 million.

So the winners here are a relatively few American cotton growers, whose business is protected from Brazilian imports. And Brazil's cotton growers perhaps also will get some of Uncle Sugar's money. Of course, the biggest winner is Obama, who, no doubt, will get major campaign donations from the protected cotton growers.

But who loses? First, among the biggest losers are U.S. consumers, who will pay far more for cotton clothing and other goods. And, of course, U.S. taxpayers will be soaked, not only to subsidize the protected American cotton growers but to subsidize Brazilian cotton growers as well.

So there you have it. A few organized workers and farmers funnel money to the administration, which then protects them from competition. They win. But in the ensuing trade wars, the vast majority of other workers, and other farmers, in addition to all consumers and taxpayers, get ripped off.

Behold, crony capitalism.

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